05 October 2013 12:09 PM

THE Bank of England's Monetary Policy Committee meets this week. Why? Nothing much is going to happen, and the post-meeting reiteration of the Bank's 'forward guidance' (simply put, that monetary policy is going to stay very loose for a very long time) could presumably be pre-loaded into the MPC's e-mail account and distributed at noon on Thursday.

One of journalism's great catch-phrases is: 'It wasn't meant to be like this.' A wonderful stand-by to introduce any story containing an element of disappointment, whether a business failure or the break-up of a band over 'artistic differences'.

But in contemplating the MPC, the cliche is spot on. Just to recap, the MPC has a two per cent annual inflation target which it has failed to meet every single month since November 2009. Nobody believes in that target any more, but at least it took some years for it to be discredited.

By contrast, the Bank's second target - that of keeping interest rates low until unemployment reaches seven per cent or less of the workforce - was discredited within a few weeks of being promulgated this summer. Initially, it had seemed likely that the magic seven per cent level would not be reached until 2016; as it seemed unemployment was falling more rapidly than expected, Mark Carney, Governor of the Bank, hastened to point out that seven per cent was not some sort of trigger, which was precisely what the rest of had thought that it was.

The MPC, and Mr Carney in particular, seem to want to keep rates down. The unemployment target looked like a good way of doing this, but should it prove not to be then some different rationale for loose policy will surely be found.

To misquote Groucho Marx: 'These are my targets. If you don't like them, I have others.'

1) Is your journey really necessary?

SO here is how monetary policy was supposed to work. The MPC would adjust Bank Rate to hit its inflation target. Central to the notion of an independent central bank was the idea that it would always be easy to see where rates ought to be, but politicians would frequently prove too cowardly to set them at the correct level, hence bring on the technocrats.

Implicit in this thinking is the premise that rates will frequently need to be raised - no politician ever worried over-much about cutting borrowing costs - and this 'tough' decision is best taken by independent experts immune from electoral pressure.

Here is what has happened in practice. Since 2008-2009 there has been no attempt to adjust rates to bring down above-target inflation. Bank Rate is 0.5 per cent, the lowest in the Bank of England's 300-year history. Not only has policy not been tightened, it is not even neutral - a neutral Bank Rate, encouraging neither expansion nor contraction, would be about 3.4 per cent, that being the sum of the widest inflation measure, the GDP Deflator, and the current annual growth rate, respectively 2.1 per cent and 1.3 per cent.

In short, independent central banking has not worked. It thus joins all those other projects from the late Eighties and Nineties that haven't worked: the European single currency, financial de-regulation, multiple public-sector IT projects, the 'golden rule' for the public finances...

2) Quack quack

SOME years ago, I was given a copy of A Load of Blair, a very funny book about the duplicity and worthlessness of modern political rhetoric, written by one Jamie Whyte (Corvo Books; 2005). Now Mr Whyte has popped up as the author of a paper for the Institute of Economic Affairs entitled Quack Policy: Abusing Science in the Cause of Paternalism.

With forensic good humour, he takes apart the bogus politicised 'science' behind such policies as a minimum price for alcohol and the smoking ban. He is especially good on the silly/sinister 'happiness science' beloved of the present government. Reading Quack Policy reminded me how much I like the IEA when it is standing up for the liberty of the person, as opposed to trying to persuade us that big business is, in reality, a cruelly persecuted minority.

Anyway, at £10 it is fairly keenly priced, as one would expect from a pro-market think-tank.

3) I'll drink to that

ON the subject of worthless, politicised 'science' - or policy-based evidence-making, to use the technical term - it is still possible to hear a wonderful dissection on the BBC website of State propaganda about the dangers of giving drink to young people. Radio 4's excellent More or Less programme tore the 'evidence' to shreds:

The programme in question went out on December 18 2009. Here is the link - the alcohol item is early in the programme:

WAS I along in feeling a pang of nostalgia when David Cameron told his party conference that profit 'is not a dirty word'? It will be a measure of Ed Miliband's success in shoving the debate back on to ground unoccupied since the Seventies if we return to the days of earnest discussions about 'the profit motive'.

Some of us can remember (just about) the defensiveness of business interests on precisely this topic back in the days when millions shared instinctively rather than intellectually the Marxist analysis that profit could come only from stealing part of the product of the workers' labour.

Were labour the only source of value (Karl M's basic point), this would be entirely true. As it isn't (land, capital and enterprise are other factors) then it is incorrect. Still a potent rallying cry, however.

Thanks again for reading and enjoy the weekend.

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

My research and analysis site Aspect 2 can be reached on http://aspect2.wordpress.com

28 September 2013 11:24 AM

NO, is the short answer to that one, although we had some superficially brighter figures on both fronts this week. Not before time, you may think. More than inflation, more than unemployment, more even than our propensity for housing bubbles, poor productivity and a chronic balance of payments deficit represent probably the two most intractable problems facing the British economy.

First up, on Thursday, the second quarter balance of payments numbers showed a current account deficit of a shade under £13 billion in the three months April through June, down on the £21.8 billion recorded in the previous quarter and on the £17.4 billion clocked up in the second quarter of 2012.

So, moving in the right direction?

Mm. We ran much lower deficits in the second, third and fourth quarters of 2011 - £4.3 billion, £9.4 billion, £5.5 billion - so wittering about the 'direction of travel' (an expression I detest) doesn't really do the job.

The real question is how we are managing to run deficits of between three per cent and 5.5 per cent of gross domestic product - boom-time deficits - without a boom. I suspect that for all the happy talk in high places about the 'good tales to be told' regarding British manufacturing, our industry is simply too weak to meet domestic demand, however subdued that demand may be.

As for the productivity figures, published on Friday, while there seems to be some improvement in our rate of productivity increase, there was also a rise in unit labour costs of 2.2 per cent during the quarter 'reflecting the high level of bonus payments', and we are still struggling to make up the collapse in productivity seen in 2008-2009 and again in 2012.

But is anybody surprised? Many parts of the workforce seem to be almost deliberately mob-handed, in the manner of those pre-1989 East European states that boasted they had 'solved' unemployment.

Exhibit A would be public transport, with its supernumerary employees, not least the 'train crew' who desperately try to justify their existence by repeating all the announcements already made by the recorded voice and inventing a few extra, fatuous ones for themselves to read out. The vast numbers in silly fluorescent bibs on Tube station platforms, putting on even sillier voices to tell everyone to 'mind the doors' and similar, are part of the same disease of over-staffing. No wonder we have the highest train fares in Europe- there is a big payroll to meet,

Exhibit B would have to be law enforcement. Not that this makes us any safer (other than in the dream world of the fiddled crime figures) but any busy part of London is choc full of gum-chewing, machine-gun waving police officers, chatting to each other, with their junior branch of 'community support' officers nearby, also passing the time of day.

Exhibit C must be the banks. I had assumed, 25 years ago, when the banks protested that once they had automated back office and cash dispensing functions they would still employ lots of people to talk to the customers, that they were lying. More alarmingly, they seem to have been telling the truth. At my nearby branch of a well-known bank, you can hardly enter the premises without having a floor-walker ask if they can be of any possible assistance.

Very nice and all that, but were I a hard-nosed investor in bank stock, I should be wondering why, to use the jargon, the 'productivity gains' had not been 'captured'.

1) Party leader has good idea - shock!

GREAT indeed ought to be the rejoicing when a member of the political class actually suggests something that would be of genuine benefit, as opposed to merely further the pursuit of the weirdo State ideology to which all party leaders are signed up. Ed Miliband managed it last week, not with his 'energy price cap' (an idea already collapsing like the proverbial wedding cake in the rain) but a less-noticed demand that the energy companies be forced to separate their generating operations from their distribution businesses.

Some of us are old enough to remember that this was precisely how it was supposed to work when Mrs Thatcher's Ministers drew up the blueprint for electricity privatisation in the late Eighties. The regional electricity companies - RECs - would scour the wholesale market for the best deal for their customers, thus eliminating conflicts of interest and ensuring the proper agent-customer relationship.

As with all these things (such as how did we get manouevred into the position whereby the Government 'has to sell' Royal Mail?) it is not easy to discover why this principle was abandoned. Presumably at the point when residential customers were able to choose among different suppliers it was felt un-necessary to prohibit vertical integration of generator and distributor.

In reality, so confusing are the competing tariffs that this 'choice' is no safeguard at all. Bring back the split!

(Good work, Ed. As a reward, you can go back to talking about votes for children, European integration and compulsory sex education.)

2) The big picture, 1977-style

THE State Department's historian is now releasing a number of documents from the Carter administration. Just three volumes have currently been de-classified, but one of them covers international economic affairs, thus is of special interest to me.

I have examined the first portion of this monster volume and written a commentary with selected excerpts for my research and analysis site Aspect 2 (should you have trouble with this link, the web address is aspect2.wordpress.com).

For now, an amusing bout of apparent pettiness ahead of a summit of the Group of Seven rich nations in London as to whether or not European Commission president Roy Jenkins ought to be invited.

On February 4 1977, Vice President Walter Mondale advised President Carter:

'[James] Callaghan is not enthusiastic about having Roy Jenkins there on a more or less co-equal basis.'

By April 29, it has become clear that France's President Giscard doesn't want Roy there either. Perhaps faced with the intolerable prospect of finding themselves in agreement with the French, the British seemed to change their tune, as evidenced in this memo from Henry Owen, White House official for economic summits, to President Carter:

'British thinking is that Jenkins will attend the second day of the Summit, but not the first—when domestic economic policy, nonproliferation, and other subjects not thought by the French to be in the Commission’s competence will be discussed. This will create problems, since it will be difficult to dissociate non-proliferation from energy, which is to be discussed the second day. The British hope that Giscard will relent and let Jenkins come part of the first day, as well.'

As it was, Jenkins had to be content with day two only, but he did get a warm welcome from the summit host, Callaghan, who had originally not wanted his rival in the previous year's Labour Party leadership contest to have much of a role at all.

3) For our next piece of displacement activity...

SUGGESTIONS that my old drinking mate (sorry, 'top Whitehall contact') Damian McBride had been accused of breaking the law in relation to some of his more extreme spin operations on behalf of Gordon Brown made my heart sink. Not because I don't think Damian could look after himself should the boys in yellow bibs and baseball caps turn up at his front door, but because you just know where it will all end.

Scotland Yard will announce it is 'casting the net wider' in terms of alleged misconduct by spin doctors. A twitty name will be invented - 'Operation Twiglet' - and 50 detectives will be assigned to the 'case'. Did I say 50? Make that 100.

Anyone who has ever worked in a Downing Street press office will be arrested in dawn raids and their houses will be ransacked. They will then spend years on 'police bail', the exciting new device allowing the State to ruin people's lives without the bore of putting them on trial.

You read it here first.

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson, is published by Palgrave Macmillan

21 September 2013 12:59 PM

What a week for the 'recovery'. British productivity figures for 2011-2012 showed the widest gap between ourselves and the rest of the Group of Seven rich nations in 18 years, and showed also that we actually produced two per cent less in 2012 than in 2007.

Meanwhile, retail sales followed a strong July with a weak August, reinforcing the impression that recovery, 2013-style, involves one step forward and most a step back again.

Across the Atlantic, the Federal Reserve Board came to the view that America's own recovery was still a poor, fragile thing and decided, after all, not to begin immediately winding down its colossal money-creation programme under which about $3 trillion has been conjured into existence and pumped into the economy, making our own £375 billion scheme look small beer.

Markets jumped for joy at the news that their favourite fun drug was still on offer, courtesy of the Fed's Dr Feelgood, Ben Bernanke.

There was, however, one bright spot, with the news that the Coalition is to spend £600 million of the money we are supposed not to have extending free school meals to all infants, including the ones whose parents need no such subsidy. This widely-ridiculed announcement came from Nick Clegg at his party conference - more than most British politicians, he uses children as human shields when any sort of difficulty raises its head, in his case the Liberal Democrats' truly appalling poll numbers.

As I have written (maybe too often) before, the critical question is whether we are living through another 1933 or 1973. If the former, then thanks to unconventional monetary policy (leaving the Gold Standard) a recovery is under way, slowly but surely. If the latter, then thanks to unconventional monetary policy (the breakdown of fixed exchange rates and a massive monetary stimulus) an inflationary blow-out and a much deeper crisis awaits us.

1) Yesterday once more?

Self-interest attracts me to the 1933 answer, my instinct towards 1973. Allister Heath, editor of City AM, looks to me like a '73-er.His excellent leader on Thursday morning mocked the 'brave new world' in which 'bad news is good news' because it gives central banks such as the Fed an excuse to keep 'monetary methadone flowing freely'.

Twenty-four hours later, Allister was less sure footed on matters pertaining to the early Seventies, with a leader bemoaning Britain's failure 40-odd years ago to build the third London airport at Maplin Sands. The project, also known as Foulness, was truly gigantic in its scale. To be fair, Allister acknowledges this - and heartily approves.

Others did not. Here is Christopher Booker:

'[T]he Maplin scheme [was] far more ambitious than almost anyone realised at the time, involving as it did not just the building of a new, third London Airport on the Essex marshes, but the biggest land reclamation scheme the world had ever seen, the building of a new city for 250,000 people, a new port equal in size to Rotterdam, the largest in Europe, not to mention the two vast swathes of destruction that would have been involved in driving special new motorways and rail links into the heart of London, across some of the most densely populated country in Britain.'

(The Seventies: Portrait of a Decade; Allen Lane; 1980)

Labour returned to power in 1974 and its Environment Secretary Anthony Crosland cancelled the whole scheme, which he had dubbed 'Heathograd', after the now-ousted Prime Minister.

2) What goes round

From 1944 to 1976, economic policy was guided, in part at least, by the goal of full employment. That was the target.

In my voting lifetime, during much of which I have been a financial or economics journalist, we have had a number of substitute targets: domestic credit expansion (an early Labour version of money-supply targets), a target for 'broad money' (Sterling M3), which includes notes, coins and bank deposits, a target for 'narrow money' (Sterling M0), including just notes and coins, tying ourselves to the European Exchange-rate Mechanism (with success or failure gauged by the 'ERM divergence indicator'),then inflation targeting and now, under the new Bank of England Governor Mark Carney, one of the targets is to be...employment.

Over the summer, Mr Carney announced that he would not think of tightening monetary policy until unemployment fell to at least seven per cent of the available workforce. The rate was then about eight per cent.

The Governor seemed to think the employment target would not be met until 2015-2016. But since then, the rate has fallen more rapidly than expected. Mr Carney hurried to a gathering of business folk in Nottingham to explain that seven per cent was not some sort of automatic trigger for tighter policy. Er, so what is it then?

I fear that, however unworthy, the suspicion is taking root that the Governor may have chosen the target to fit his preferred policy rather than vise versa. If so, it probably won't be the first time this has happened in the UK.

3) Mis-spoken

I am putting together a list of words and phrases with very specific meanings that are routinely used incorrectly simply because they sound like a grander version of something else.

'Contingent liability' is one such. It is used as a wordier version of 'liability', i.e. to describe a position in which someone is liable to do something or pay someone. A liability, in other words, that has been established.

But a 'contingent liability' will become established only if something else happens. It is upon this 'something else' that it is contingent.

Here's another: 'deadweight cost'. Again, this is used as a ten-guinea version of the bog-standard 'cost', as in: 'Layers of middle management represent a deadweight cost for British businesses.' Deadweight cost is just a heavier and more burdensome cost.

Except that it isn't

A deadweight cost is a specific economic expression, best illustrated by imagining that you visit your local butcher and are told that 2lbs of corner cut is being sold at half price, £6 instead of £12. Imagine the butcher's delight when you respond to this brilliant piece of marketing by ordering 2lbs of corner cut!

What the butcher does not know is that it was this joint that you had come to the shop to buy - at the old price. The deadweight cost of the transaction for the butcher is £6.

How about 'cross-infection', now bandied around as a double-barreled way of saying 'infection'? Its proper use relates to hospitals and other places of medical care, in which one patient is infected by another.

Any other examples gratefully received.

4) Raising a glass to Classless

MY review of A Classless Society: Britain in the 1990s, by Alwyn W. Turner has now been published by Lobster magazine. The link is

BACK in the Eighties and early Nineties, colleagues and I used to predict that, in the event of shock election victory for the Monster Raving Loony Party, it would take about one week before Screaming Lord Sutch and Tarquin Biscuitbarrel would appear in dark suits explaning the need for a tough public spending round and a credible anti-inflation policy.

Such is the sinuous ability of the British establishment to turn wild men into conformists.

Now it is the turn of Nigel Farage and his UK Independence Party. Remember UKIP? It was the outfit that was no way going to bow down to political correctness. No sir.

Now we find out that some joker called Godfrey Bloom MEP has had the whip withdrawn for making stupid and disobliging remarks to some female activists. This, apparently, is now a hanging offence in UKIP, just as in all the other parties.

Welcome to the political class, Nigel.

PPS: This is now my new site. Thanks again for your patience while it was being set up. I hope you enjoy the weekend.

dan.atkinson@live.co.uk

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

12 September 2013 1:50 PM

"‘Where an economic problem arises, let us observe whatever seems significant, and follow clues to causes wherever they may lead."
- Henry Phelps Brown, speaking to the Royal Economic Society in July 1971

10 September 2013 9:14 AM

As the modern breed of bank robbers get ever smarter, we still get plenty of old-school fake emails from 'banks' asking you to just type in your Pin and a few personal details. It's a crime that still pays.

We also receive emails from readers asking us: Is this a scam?

If you have to ask then it probably is.

We'll be posting the scammers correspondence here for all to see.

Please post those you receive in the comments at the bottom.

+++ +++

This is not really from Amazon. It's from scumbags.

Amazon <support@amazon.co.uk>

24 September 2013

Hello!

Your profile will be locked in response to a complaint received by the
Administration 20.09.2013

According to "paragraph 8 of the user agreement, Amazon.co.uk reserves the
right to suspend or terminate the provision of services Amazon.co.uk, promptly notifying the user.

Refute the statement may be, following this link:

https://accounts.amazon.co.uk/

If the
application is not rejected within 7 days, your account will be blocked.

Your refference number is: 321079092791672.

In the near future we will contact you.
It takes up to 3 days to process your request.
Thank you!
--------------------------------
Sincerely,
mail support service
Amazon.co.uk

+++ +++

20 September 2013

PayPal <test@test.com>

Dear PayPal Member,

As part of our efforts to provide a safe and secure
environment for the online community, we regularly screen account activity.
While reviewing your PayPal accounts, we observed activity that we would like
to further verify.

For this reason, limitations have been placed on your
account until your will review your registered intormation.

In order to resolve the account limitations, download and
complete our Form.

After we have gathered the necessary information, your
account will be reviewed for reinstatement and you will be notified of our
decision.

We thank you for your prompt attention to this matter and
apologize for any inconvenience.

Sincerely,

Account Review Department

+++ +++

Supermarket scam - looks like the real Sainsbury's but hidden behind is a phishing site

18 September

You have
been selected by Sainsbury's Supermarkets to access the Customer Satisfaction
Survey and win 100.00 POUNDS credit to your account.

Please
follow the link below and complete the form in order to receive your reward:

01 September 2013 8:15 AM

AS one of the world's slowest readers, I finished Alwyn W. Turner's latest book A Classless Society: Britain in the 1990s, (Aurum; £25) - despite having had a copy for two weeks - just as a not-universally-admired Tory Prime Minister lost a key vote in the House of Commons, partly through a revolt of his own backbenchers.

What goes round, eh?

Maybe. Before I go any further, I'd better say I am writing a proper review of A Classless Society for Lobster magazine, and when it is published I shall post a link. This is more of a personal response to what is a tremendous book.

At some point during the Nineties, my wife and I popped into a convenience store in London to buy a few of life's essentials (cigarettes, drink, newspapers, milk etc) and I chortled at the boast engraved on the window: 'Established 1976.'

How reassuring, I sneered, that some things never change, even in this fast-moving world. Wiser, as usual, than I, she pointed out that the shop's foundation year was, in fact, some way back in the past.

Well, the distance between that date and today is of the same order as the gap between that date and the mid-Seventies, which means that one of the first things to say about Mr Turner's subject-period is that it is now quite a long time ago. Somebody born the month John Major succeeded Margaret Thatcher would now be planning their 23rd birthday celebrations. I was in the same position at the start of Mrs Thatcher's battle with the miners with regard to the (pre-Profumo Affair) government of Harold Macmillan complete with Chancellor Selwyn Lloyd.

Who he? Exactly.

So let's recap the early Nineties: no WiFi, no BlackBerry, no smoking ban and, for most people, no computers able to do anything much more than word processing. A few sophisticates (including, I believe, the Duke of Edinburgh) had e-mail. Most of us did not. Usage of public telephone boxes was at peak levels, British Rail was still in business and not only was London Underground not obliged to offer wheelchair access, but an old by-law actually banned said wheelchairs from the Tube.

This book takes you there, and reminds you of the taste and feel of those times and of the Nineties in total. I am not going to cannibalise my review, but it is no secret that Mr Turner is very good also on the dominant political figure of Nineties Britain, John Major (now Sir John). His successor, Tony Blair, was much more a man of the Noughties, scene of both his triumphs (Sierra Leone, the second election landslide in 2001, the initial response to the September 11 attacks) and his tragedies (Iraq, the Kelly affair).

Reading A Classless Society confirms my own prejudice that the Nineties and the Noughties are very much a re-run of the Fifties and Sixties, but with The Beatles and The Rolling Stones emerging at the same time as new British cinema and kitchen-sink drama, i.e. in the Fifties, rather than, as was actually the case, a few years later.

Thus a major world conflict came to an end in 1945/1985 with the defeat of Hitler/the election of Gorbachev, a post-conflict mini-boom marked by a love of all things American, by double-breasted suits for men and a big-shouldered new-look for women and by the big band sound/rap music was swiftly succeeded by a hugely-unpopular official squeeze designed to drive down consumption and build an export-led economy (rationing and austerity then, Sterling's membership of the European Exchange-rate Mechanism in the early Nineties).

Both the Fifties and the Nineties ended very differently from the way they had started. In both cases, a grim first few years suggested a return to the crisis years of the past (the Thirties then, the Seventies and early Eighties in the latter decade). In both cases, such comparisons (of which I myself was guilty as a journalist on The Guardian in the Nineties) were wrong.

In both cases, the third and fourth years of the decade marked a surprising brightening of the economic circumstances of the average British household and in both cases the decade went out on a high - Macmillan's 'candy-floss summer' of 1959, the Millennium jollities of 1999.

Along with the need to move round some of the cultural furniture in making sense of any comparison of the Fifties and Sixties to the Nineties and the Noughties are the different comparisons of political leadership. With Blair, we ended up with an amalgam of Macmillan and Harold Wilson, i.e. we had a bad (albeit successful) actor with a Scottish surname, an English accent and a talent for taking power during an incipient boom merged with a Labour leader liked and trusted by the professional middle class but considered slippery by the media-political establishment.

But there is no such thing as a free lunch, and having got away with a merged Blair-Macmillan, we have then had to endure not one but two Edward Heaths, with Gordon Brown representing the 1970-1974 Prime Minister's resentful and awkward side and David Cameron his doomed attempts to replicate a successful Labour leader.

Someone once said that every head of the BBC will be worse than the last, and, returning to where I began, with a comparison of Major and Cameron, it is hard not to feel the same way about Prime Ministers. Lots of us (myself included) said beastly things about Major but nobody assumed he was a phoney.

The inauthenticity of David Cameron, however, is painful. When he gives one of his 'family friendly' speeches mentioning 'mums' and 'kids', one imagines his being briefed by advisors that these are the terms used by the lower class when referring to mothers and children.

Indeed, nothing he does seems believable. Photographed at the seaside, he gives rise to the suspicion that he dislikes the sea. Ditto drinking a pint of beer, sitting in a cafe with his wife or pretty much any other activity you care to mention.

For this, of course, we have to thank Major's successor and central figure of the latter part of this book, Tony Blair.

Mr Turner winds up his narrative at the time of Blair's second landslide, in June 2001. This is absolutely the right call, especially as he eschews any suggestion that presentiment hung in the air, that the cataclysmic events of that autumn were dimly foreseeable or any similar retrospective crystal-ball gazing.

He hints that the decade that followed the summer of 2001 is of less interest to him. Well, fair enough, although given that it involved Britain in two wars, put the City at the epicentre of a global financial crisis and ushered in the first formal Coalition Government since the war, you have to wonder whether Mr Turner will be able to resist writing about it.

No, I don't think so either.

In the meantime, this book proves beyond doubt that the Nineties were a very important decade. One day, there will be lots of books about this period.

I suspect that the first may well be the best.

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

24 August 2013 12:24 PM

I was on LBC last night, talking about the revised growth figures published earlier in the day. No-one likes to be a dog in the manger (I don't, at any rate) but I did urge listeners to be cautious about any claims that our economic injuries are healing fast.

Yes, the second-quarter growth figure was revised up from 0.6 per cent to 0.7 per cent but gross domestic product is still more than three per cent below its pre-crisis peak.

Furthermore, even with the upward revision, the year-on-year rate is a miserable 1.5 per cent, well below the two per cent minimum thought necessary to stave off unemployment, there being roughly a two per cent annual rise in productivity.

City analysts have raised their growth forecasts a little - a month ago the average estimate was for one per cent this year and 1.7 per cent next year. Now they have growth at 1.2 per cent this year and 1.9 per cent next year.

Still below the magic two per cent, in other words. And economies exist not for their own sake but for the benefit of the people they serve. As I pointed out in an economic bulletin I was writing earlier this week, earnings growth continues to lag significantly behind price rises.

Four words tell the tale: we are getting poorer.

1) Put out the flags?

THE fact that those growth numbers were helped by a better than expected foreign trade performance triggered talk in some quarters that the great rebalancing of our economy away from consumption and towards manufacturing and exports,

A little reality check is in order. The balance of payments has not been in surplus since Michael Foot's Labour Party was scythed down at the polls by Margaret Thatcher's Tories, Michael Jackson's Thriller album was flying off the shelves (for reasons that have always baffled me) and Michael Caine and Julie Walters were lauded for their performances in the film version of Educating Rita.

Don't bother running these nuggets through Google - it was 1983.

What we are talking about here is a culture of low expectations. We manage to sell some products abroad and suddenly we are the new Germany. We managed to host an athletics competition last year and suddenly all our problems were over, we had rediscovered our pride and shown the world what we could do.

There was a time before league tables when a school friend came across our normally-equable head of English in a despondent mood. It was a boys' school, so staff members' daughters went to the local girls' grammar. My friend enquired as to the cause of the master's gloom, to be told that he, the master, was heartily fed up with the school putting out the flags whenever it managed to achieve A-level results that would be routine and unexceptional at the establishment attended by his daughter.

It seems the whole country has now developed the same condition.

2) You've come a long way (sort of)

I have been working in Victoria this week and was quite taken aback by how corporate and spruced up it has become, with shiny glass office blocks and the constant roar of redevelopment. As with many a Sussex kid, Victoria was my gateway to London and as a teenager I vaguely imagined that, with Buckingham Palace round the corner and the Catholic cathedral right by the station, this was a smart part of Town.

By the time I realised that not only were there far smarter parts (Kensington, or Mayfair, for example) but also that Victoria was actually quite scruffy and seedy I was quite fond of it for what it was. I remember in the very early Eighties a buffet on the station called The Downs, the first establishment that I can recall with a total smoking ban, although this was largely ignored. Across from the station was a place called (I think) The Great British Disaster Restaurant (no, I've no idea why either).

There remains, by an entrance to the Tube station, a relic of the old days, a cafe with Formica tables and clouds of steam billowing from behind the counter.

But for how much longer?

3) The day before yesterday

AS expected, I am enjoying enormously Alwyn W. Turner's new book A Classless Society: Britain in the 1990s (Aurum; £25). It is a tribute to the author that I will occasionally find myself recalling what I was up to at the time. For me, the decade really kicked off in March 1990, when - there being no-one else available - I was dispatched by The Guardian to cover a G7 finance ministers' meeting in Paris. The communique was in French with no English version in sight. As I subjected the document to my schoolboy French, Chris Huhne, who was there for The Independent, sportingly helped with the translation.

On my return to London, my taxi driver gave me a blow by blow account of the Poll Tax riot that had rocked the capital while I had been swanning round in the city of light. My colleague Larry Elliott had been quite sympathetic to the protestors until he learned they had smashed the windows of Cafe Pelican off Trafalgar Square, after which he insisted that only the sternest measures would suffice.

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

17 August 2013 10:57 AM

THERE'S a (probably) apocryphal story that the business page of one newspaper greeted the 1938 Munich agreement with the headline: 'Shares fall on peace fears.' Not quite as perverse as it sounds given the big beasts of the stock market in those days included the likes of Vickers Armstrong, a major player in the world of armaments.

But what are we to make of last week, when 'fears' of a US recovery sent shares skidding? American jobs data and inflation rate pointed to an upswing across the Atlantic, and markets fell out of bed.

What is going on?

Simply this. The better the US (and British) economies perform, the sooner the powerful 'quantitative easing' drug will be taken away. This is the process whereby central banks create money out of thin air and use it to buy assets, usually the bonds issued by that country's government (convenient, huh?).

In our case, £375 billion of this new money has been created. Now the fear is that this massive stimulus is the only thing keeping the economy afloat and that any signs of a recovery mean the prescription will be cancelled.

If this sounds ludicrously the wrong way round, that is because it is. Trevor Williams, senior economist at Lloyds Bank Commercial, sounded a note of sanity. 'It is a little strange for investors to treat good news in this way. After all, economic recovery is what these stimulus programmes are for.'

Unless, of course, they are taking the view that the medicine and the recovery are tightly meshed together and that the 'recovery' is really nothing of the sort, merely a reaction to a massive stimulus. Maybe those clattering share prices are trying to tell us something.

1) Now we are ninety

ALWYN W. Turner's new book A Classless Society: Britain in the Nineties (Aurum; £25) is due to be published during the next few days. I caught up with the great man in London yesterday and took delivery of a copy. What a treat it promises to be.

I shall give you a full report when I have finished reading it, but one thing that struck me just browsing the photographs is how memory plays tricks. I could have sworn that The Darling Buds of May aired in the Eighties and that David Mellor's family line up, staged to show wife and children standing by him after a bout of amnesia concerning his marriage vows, was also an event of the previous decade.

Conversely, I had, until recently, always thought of Inspector Morse as the quintessential early Nineties television programme, beautifully filmed, well acted cerebral entertainment for those rather grim days at the start of the decade. Not true: the first series aired in January 1987 and the last in summer 1992, although there were some 'specials' later.

2) The way they were

AT the front of A Classless Society is a photograph of an impossibly-youthful John Major on his soapbox during the 1992 election, surrounded by supporters and opponents, at the back is a picture of a solitary Tony Blair on his campaign aircraft. The contrast is striking and had me thinking how traditional a figure was Major in contrast with what was to come.

I worked on a national newspaper at the time and followed current affairs quite closely, but I had no idea what television programmes he watched, nor see staged photos of him 'doing the school run'. I do not recall Major pretending to play computer games or to like the Arctic Monkeys (OK, Gordon Brown was apparently misquoted on this last point) or to follow keenly television talent shows.

From memory, here's what we knew. He was a cricket fanatic (as Attlee had been before him), he read Trollope, was interested in classical music and enjoyed gardening. That's it.

What a dignified contrast to the plausible young men who came after, the career politicians desperate to show their non-existent ordinariness with clunking references to football and popular culture. As the great lady said, you don't know what you've got 'til it's gone.

3) A pleasant (if hazy) memory

THE notion with which I started this post, that of a patient becoming over-fond of the medicine, reminded me a visit to the school medical officer when I was 15 to complain of a string of bad dreams that were giving me sleepless nights. This was obviously a little more interesting than the usual run of sports injuries and blatant attempts to get off games or lessons, and after consulting a pharmacopeia he prescribed some tablets, the name of which I cannot remember.

Somehow I worked out that were I to save up a week's-worth and take them all at once, I would experience a very, uh, pleasant feeling. Get high as a kite, in other words. Happy days/daze. I won't say it was a long time ago, but the Prime Minister's first name was Leonard, he had replaced a Prime Minister whose first name was James and the American president had been born Leslie Lynch King.

Trivia - don't you love it?

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

09 August 2013 9:14 PM

BE careful what you wish for. Ever since Britain's calamitous 1990-1992 membership of the European Exchange-rate Mechanism (ERM), I have soldiered away in the good cause of insisting that control of inflation ought not to constitute the be-all and end-all of monetary policy.

And now what has happened? After precisely 20 years of inflation targeting, new Bank of England Governor Mark Carney has conjured up a second objective, the reduction of unemployment to seven per cent or less of the available workforce.

What's wrong with that?

OK, well here are three points to be made.

One, the unemployment target is officially of less importance than the two per cent inflation target. Officially, but not really. We all know the inflation target went by the board years ago. Ministerial-sanctioned dishonesty in terms of the 'real' target cannot be a good thing.

Two, how does immigration affect this new goal of central banking? After all, if the workforce gets bigger, then, providing jobs are being created, the percentage unemployed gets smaller.

Three, the current 'strategy' of getting monetary policy to 'do the heavy lifting' seems highly questionable. Is the central bank really the right agency for achieving every economic goal? There's an old saying about a jack of all trades being a master of none.

1) Tapping the barometer

THE general chorus of approval for Mr Carney's debut is part of a wider mood of cheeriness about our economic prospects. As I noted last week, this may be entirely justified, assuming we are experiencing a re-run of the early Thirties, when a slow but sure recovery was under way, but would look rather less clever were we to be in the middle of a repeat of the events of 40 years ago, when an apparent upswing went horribly wrong with the Arab-Israeli war of October 1973.

Or rather, when the autumn Middle East conflict and the subsequent squeeze on oil supplies caught the west at just the wrong time, when a massive economic stimulus left it horribly vulnerable to price shocks.

Sound familiar?

Nobody actually knows whether or not a similar storm is just below the horizon. But it would be nice to think someone was watching the glass.

2) You're having a laugh

TUESDAY'S edition of The Daily Telegraph was perhaps even more thought-provoking than usual. I'm a big fan of the paper, although I have never worked there in my chequered career (perhaps that 'although' ought to have been a 'because').

There was the item suggesting it was female viewers who persuaded the BBC that a woman ought not to become the new Doctor Who. I recall picking up a newspaper at the hovercraft terminal in Dover ahead of a Channel crossing and learning that the next Doctor Who 'could be a woman'. That was summer 1978.

Some stories remain evergreen, it seems.

Then there was the report that Jeff Bezos, founder of the Amazon retail group, had bought The Washington Post newspaper for $250 million. The story quite rightly contrasted the venerable title's purchase price with the $1 billion paid by Facebook for Instagram, 'the on-line photo-sharing service'.

Yep, well I guess it's not so much that the Washpost is undervalued as that Instagram is grotesquely overvalued (as is Facebook, probably).

On the obituaries page, it was goodbye to Admiral Sandy Woodward, commander of the South Atlantic Task Force in 1982. The piece ended by noting that he was separated from his wife 'and since 1993 his companion has been Winifred "Prim" Hoult'.

Sorry? The Admiral's girlfriend was nicknamed Prim?

On the same page was an obituary for Dominick Harrod, former economics correspondent with the BBC. I too was a CE (to use the French initials used on some accreditation) for well over a decade. It is a small and select breed and the loss of any one of them is always sad. Ask not for whom the bell tolls...

3) Nice idea, shame about the likely outcome

DAVID Cameron's insistence that it is time to reduce the 'cost of politics' in terms of the number and remuneration of legislators could have a lot of appeal. The trouble is, I don't see it is really connected to a wider view of the world, to any set of beliefs. It is rather like one of those dummy switches that cooker manufacturers used to fit in the Fifties to persuade American housewives that they were doing something rather more skilled than heating up ready-meals.

Were it only I who thought this, he would not have a problem. But I don't think I am alone.

4) Fatuous officialese: two corkers

Exhibit one: from the Treasury

'Our tax system should be efficient and fair. It should reward work and support aspiration.'

As opposed, presumably, to being inefficient, inequitable and rewarding sloth?

Exhibit two: from the Army

'The Yorkshire Regiment is a tough, forward looking and thinking Infantry Regiment that delivers excellence in all that it does.'

As opposed to an ineffectual, hidebound and brain-dead outfit that delivers nothing but abject mediocrity?

5) Bye bye Beck.

HOW sad a week ago to bid farewell to Radio 4's excellent adaptation of The Martin Beck Killings, the detective stories of husband and wife team Maj Sjowall and Per Wahloo set in Sweden in the Sixties and Seventies. The top three sleuths were played by three marvellous actors, Steven Mackintosh as Beck, Neil Pearson as his sidekick Kollberg and as no-nonsense copper Larsson we had Ralph Ineson, who played the boorish but apparently-unsackable salesman Chris Finch in The Office.

The final episode, The Terrorists, was set in 1974, ten years after the first. It ended on a Friday in January 1975, with Beck and his girlfriend and Kollberg and his wife enjoying 'just the kind of evening everyone hopes for more of, the kind of evening when everyone has eaten and drunk well and knows that they are free the next day'.

Here's to it.

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan